What metric indicates how many times a single loss event is expected to happen annually?

The metric that indicates how many times a single loss event is expected to happen annually is the Annual Rate of Occurrence (ARO). ARO is essential for risk management and allows organizations to quantify the frequency of potential loss events within a year. By determining the ARO, organizations can estimate the likelihood of specific incidents, which is critical for budgeting losses and implementing appropriate controls.

ARO is often used in conjunction with other metrics, like Single Loss Expectancy (SLE) and Annual Loss Expectancy (ALE). While SLE estimates the monetary loss from a single incident, and ALE combines ARO with SLE to forecast total potential losses over a year, it is ARO that specifically focuses on how frequently such events may occur within that timeframe. Knowing the ARO helps organizations to proactively prepare for potential risks and allocate resources more effectively to mitigate them.